RI Annual Report 2023

Active Ownership


Voting activities

As a signatory of the UNPRI, we have undertaken to integrate ESG factors in our investing activities, and this is reflected in our voting practices. Our proxy-voting activities cover governance themes, and each year we work hard to expand our voting activities around social and environmental themes, which we illustrate here.

Climate Climate has been one of our major active ownership themes for years, and 2023 is no exception. Climate poses significant investment risks and opportunities to many companies. Companies are thus encouraged to align with the Paris Agreement. Climate votes represent an opportunity for us to signal our approval or voice concerns over a company’s climate action plan. In 2023, a lot of our work revolved around alignment with the Paris Agreement. Our activities here were wide ranging, from shareholder proposals in favour of aligning targets for indirect scope 3 emissions with the Paris Agreement, like we did with Total Energies and Shell, to requesting better reporting on GHG emissions targets with Public Storage and reporting on Corporate Climate Lobbying practices with Toyota Motor Corp. On proposals that require companies to disclose information about its governance, strategy, risk management and targets related to climate risks, we voted in favour. Finally, the Corporate Governance Team cooperates with the Responsible Investments Team to harness the power of voting and engagement together. One example is our activities around reducing methane emissions, which is now the topic of a company-wide engagement campaign. In 2023, we voted in favour of reporting on the reliability of methane emission disclosures for Coterra Energy Inc.

Compensation We are positive towards reasonable share-based incentive programs for employees in investee companies. Incentive programs should incentivise long-term ownership of shares and should be constructed with requirements of own investment and financial as well as ESG performance criteria. Nevertheless, we frequently voted against the proposed executive remuneration mainly in the US. This is because performance criteria in the share-based incentive programs were inadequate or non-existent, combined with too generous outcomes. We’ve had several discussions with companies about their incentive programs. For example, a Swedish company presented to us a management compensation program prior to sending out the notice to the shareholders meeting. As the amount of shares being awarded key management was far too generous and not in the best interest of the shareholders, we declared that NAM would vote against the program. The program was pulled from the shareholders meeting before the notice was sent and a new program was presented at an extra general meeting Board composition and gender diversity Nordea believes that participation on owner-lead nomination committees is a good forum to influence the composition of the board of directors and drive real change – for instance bringing about greater board diversity. We believe that a board should be diversified in terms of gender, experience, age and other factors. In terms of gender equity, we think a board should preferably be made up by at least 40% of either gender. That’s why we reached out to 75 companies where there were no women on the board of directors stating that we will would vote against the Chair of the Board of Directors, or the Chair of the Nomination Committee if there was no change. In 2023, 56% of the companies addressed had elected at least one woman on the Board of Directors. In the remaining companies that could not present a plan of intended changes, Nordea voted against the Chair of the Board or the Chair of the Nomination Committee.

Tax Transparency A company’s approach to tax is now beyond a simple question of compliance and has become, in the context of ESG, an indicator of how a business views its role in society and its commitment to its purpose. We expect our portfolio companies to have a tax policy that outlines the company’s approach to taxation and how it aligns with the overall business strategy. We also expect companies to have a robust tax governance and management frame- work in place, to pay taxes where economic value is cre- ated and to provide country-by-country reporting.

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